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Aviation Festival Asia – Ancillary revenues key to growth

Posted on: 27 February 2018

For low-fare carriers – and legacy airlines increasingly catering for the low-fare segment – it’s increasingly all about how they can leverage ancillary revenue opportunities in this ultra-competitive market these days.

In various sessions at the Aviation Festival Asia in Singapore, representatives from Cebu Pacific Air, flyadeal, Peach Aviation, World Airways, Finnair, flyadeal and the industry association APEX all flagged up how ancillaries play such a vital role in expanding their traditionally thin margins. They also stressed the importance of using social networking increasingly for understanding and servicing their customers.

Finnair is the world’s largest western carrier of passengers to and from China, and the Finland national flag bearer’s chief digital officer, Katri Harra-Salonen, stressed the importance of understanding customers.

“They are driving the market today. Things are changing quite fast, and we need to understand and to be agile. We will need to be a lot faster in the future,” she said. She also pointed out Finnair’s use of the Chinese payment service Alipay inflight for its Chinese customers – “We are trying to service our customers the way they want to be served.”

She added that Asia in particular was “a mobile-first market. Mobile service is a really important part of our strategy.”

Saudi low-fare carrier flyadeal’s CEO, Con Korfiatis, pointed out that with an average sector length of just over an hour, it needed to maximise its ancillary revenue-earning opportunities. “We think with technology like this we can increase that revenue, we can reach out to them on their phones. Streaming services, newspapers, magazines, music, videos, maps, duty free, recent movies. That’s the kind of technology that is really exciting for us.”

Despite having only been in operation for five months, he added that nearly half of its passengers were repeat customers, accentuating the need to know more about them. “How can we get more out of them? How can we do that? What are their favourite things? And so on…”

With airport infrastructure and capacity in the region struggling to keep up, he continued, it was new aircraft like the B737 MAX and A321s that “are solving a problem with their increased passenger capacity as infrastructure cannot expand. All our constraints can be alleviated by an increase in aircraft capacity.”